Financial Guidance and Claims Bill [HL]

Lord Sharkey Excerpts

Report: 1st sitting: House of Lords
Tuesday 24th October 2017 Lords Chamber

Moved by

[Lord Sharkey]

1: Clause 2, page 2, line 12, at end insert—
“( ) the consumer protection function;”

[Lord Sharkey (LD)]

My Lords, in moving Amendment 1 I will also speak—eventually—to Amendments 2 and 7. They form a linked package of consumer protection measures enabled by, and consequential upon, Amendment 1. I am grateful to the noble Lord, Lord McKenzie of Luton, the noble Baroness, Lady Altmann, and the noble Earl, Lord Kinnoull, for adding their names to the amendments and for their support for them. Amendment 1 simply adds consumer protection to the functions of the SFGB. The notion of consumer protection is implicit in the other functions set out in the Bill, but the amendment gives it statutory life. In doing this, it allows a broader definition of the reach of the SFGB. It widens its remit to something closer to the real-world situation for consumers and enables it to deal more comprehensively with the dangers and risks that consumers face.

Pensions guidance, debt advice and money guidance are all aimed at doing this, of course, but there are related areas where intervention would be of direct benefit: cold calling is one. One effect of Amendment 1 would be to allow cold calling to be dealt with in the Bill. We have discussed cold calling many times during the passage of the Bill and on many other occasions in this House. On several occasions I have described it as an omnipresent menace—and no one has disagreed. It is clear that there is a firm and widely held dislike of and dissatisfaction with cold calling, extending well beyond this Chamber. It is not only a thoroughgoing social nuisance; it is often a threat, directly and comprehensively, to consumers’ financial well-being. It is often an invitation—or more exactly, an inducement —to criminal activity.

The figures are remarkable and very alarming. There are now 2.6 million cold calls every month; that number has increased by 180% in the last 10 months. I noted that the Minister, when presented with these figures—and even larger ones—at an earlier stage in the debate, prayed in aid the ICO and the FCA. I am afraid that whatever the ICO is doing, and whatever the noble Baroness hopes the FCA might do at some unspecified time in the future, the problem is not only terrifyingly large but continuing to grow very rapidly.

On the fourth day of Committee, the noble Earl, Lord Kinnoull, made a very telling intervention; I am sure he will not mind me repeating it here. He quoted a Which? report from November 2016, which he described as detailing,

“the full horror of nuisance calls in the UK”.—[Official Report, 13/9/17; col. 2491.]

The report found that in 17 of the 18 cities surveyed, more than a third of all private phone calls were nuisance calls, and four in 10 people in the Scottish sample were intimidated by these calls. It is not easy to intimidate people in Scotland. In the same debate, the noble Earl, Lord Listowel, pointed out and emphasised the fact that many old people are particularly vulnerable to cold callers.

Then there is the successor to the whiplash scandal: the absolutely huge, and rising, number of claims for alleged holiday sickness. In July and August 2016 alone, one operator took 750,000 British, 800,000 German and 375,000 Scandinavian customers to Spain. The Scandinavians lodged 39 claims; the Germans lodged 114; but the British lodged around 4,000 claims for holiday sickness—essentially, food poisoning. That kind of thing not only costs our travel industry a huge amount and raises prices for everyone but directly encourages criminal acts on a large scale. As the noble Lord, Lord Deben, said in Committee, this a huge industry which,

“encourages fraud and leads people to do things which they would never have done without this pressure”.—[Official Report, 13/9/17; col. 2489.]

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[Lord Mackay of Clashfern (Con)]

I would like to ask whether the “direct approaches” referred to in proposed subsection (3E) need to relate to financial matters.

[Lord Sharkey]

That would fall within the ambit of the consumer protection function of the SFGB.

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[Baroness Buscombe]

I am very grateful to my noble friend for clarifying that point.

[Lord Sharkey]

My Lords, I am grateful to all noble Lords who have spoken in this debate. I am particularly grateful to the Minister for her close engagement with the matters in these amendments and for her willingness to discuss the issues involved both inside and outside the Chamber. However, I am afraid that the Minister’s objections to Amendment 1 did not have much conviction or force at all, not even when supported by the noble Lord, Lord Faulks. The simple fact is that the SFGB should obviously be in the business of consumer protection. Its remit should allow it to consider, for example, the effect on consumers’ financial well-being of cold calling for financial services. That is what Amendment 1 does, thereby allowing the consequential Amendment 2 to tackle financial harm caused by cold calling. I was grateful for the Minister’s proposals to ban cold calling for CMCs via a Commons amendment, which clearly could be done. However, Amendment 42, which is only a week away, would do exactly the same thing. Why do we have to go round to the other place to do what this Bill would do if Amendment 42 were accepted? I look forward to the Government’s support for Amendment 42 as a means of saving time in the Commons.

I was also grateful for the commitment to publish—I think I heard it correctly—draft legislation on a pensions cold-calling ban. I am sorry that the train of the noble Baroness, Lady Altmann, is due to arrive in only two minutes. However, I think I heard the Minister say that she would publish this in early 2018, which is government-speak for probably June. But I note that there was no indication at all of the timetable for such a Bill, and I refer the House again to the remarks made by my noble friend Lord Kirkwood when it comes to the probability of such a Bill. I am afraid that I did not feel the objections aimed at Amendment 7, though extremely extensive in length, were at all compelling. They were full of “shoulds”, “expects” and “mays”, when in fact “must” is better, which is what the amendment does.

With these amendments we have an opportunity to increase significantly the financial protection of consumers —particularly vulnerable and financially stretched consumers. We can, with this Bill and these amendments, bring about bans on cold calling—not just for pensions, but also for CMCs and DMCs if there is evidence of consumer detriment, as there clearly is. We have argued about preventing cold calling for a very long time, during which the problem has become significantly worse. These amendments would finally address the problem and would address it for whatever creative cold-calling scam comes next off the cold-calling scam production line. These are simple, effective and linked measures which will reduce nuisance, reduce harm and significantly increase the protection of consumers. I would like to test the opinion of the House.

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Moved by

[Lord Sharkey]

2: Clause 2, page 2, line 18, at end insert—
“(3A) In exercising its functions the single financial guidance body must have regard to the effect of cold-calling on consumer protection and must make and publish an annual assessment of any consumer detriment.(3B) If the single financial guidance body considers that there are products or services where a ban on cold-calling would be conducive to its functions it must advise the Secretary of State to institute bans on such cold-calling and the commercial use of any data obtained by such cold-calling.(3C) On receipt of advice from the single financial guidance body under subsection (3B), the Secretary of State may by regulations made by statutory instrument introduce a ban on cold-calling and the commercial use of any data obtained by such cold-calling as recommended by the single financial guidance body.(3D) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.(3E) For the purposes of this section “cold-calling” refers to unsolicited real-time direct approaches to members of the public carried out by whatever means, digital or otherwise.”

[Lord Sharkey]

I wish to test the opinion of the House.